The Royal Bank of Scotland (RBS) is in the news for mis-selling a £900 million SME lending scheme. The details underline why invoice finance and other alternative finance services have become so popular.

According to reports, the mis-selling of SME loans through the Enterprise Finance Guarantee (EFG) scheme (an initiative backed by the British Business Bank targeted at businesses unable to raise loans in the conventional manner) centres on the 75% guarantee provided by the state to lenders. RBS has been hauled over the coals for not explaining this part of the deal correctly, with some businesses believing the guarantee applied to them.

The news will do little to improve relations between the SME sector and traditional lenders, and puts the spotlight on one of the key drivers behind the rise of services such as invoice finance, peer-to-peer lending and crowdsourcing. While the EFG scheme doesn’t deserved to be tarnished, the nature of RBS’ mis-administration will reinforce attitudes among SMEs towards traditional lenders.

The SME lending policies of big banks have long been the target of small business ire, as these companies have struggled to access start-up funding and capital to maintain cash flow, and it is notable that the Federation of Small Businesses has already put its disappointment on record. This frustration has played a key role in the emergence and rapid growth of the alternative finance sector, and its evolution into a mainstream SME finance provider.

Services such as invoice finance provide a flexible, transparent and affordable means of raising capital, and have a major part to play in helping maintain momentum in the SME sector in 2015 and beyond.

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